Wachovia's Plan (WB): Dump Crappy Loans, Sell to JP Morgan (JPM)

Wachovia hired Goldman Sachs to clean up the mess left by CEO Ken Thompson. The WSJ thinks this will likely be a two-stage process:

Dump toxic loans at huge loss. Wachovia’s balance sheet has been saddled with the distressed “asset” since it bought Golden West Financial, a west coast mortgage lender which specialised in adjustable rate mortgages (ARMs).

Sell the company. Speculation on the Street is that JP Morgan is the most likely buyer. CNBC recently reported that JPM CEO Jamie Dimon is hungry to buy more distressed assets on the cheap, so WB seems like a perfect fit.

Price? Depends on how much of a hit Wachovia takes on Ken Thompson’s Golden West garbage.

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